Resumen de The Role of Similar Accounting Standards in Cross-Border Mergers and Acquisitions.
Jere R. Francis, Shawn X. Huang, Inder K. Khurana�
This study investigates whether differences in accounting standards across countries create information costs that inhibit firms from investing in foreign markets. Using the frequency and dollar magnitude of cross-border mergers and acquisitions (M&As) from 32 countries over the period 1998-2004, we find that the aggregate volume of M&A activity across country pairs is larger for pairs of countries with similar Generally Accepted Accounting Principles ( GAAP), and that this increased volume of M&A activity is driven by target countries that also have strong enforcement. We also find that the 2005 mandatory adoption of International Financial Reporting Standard ( IFRS) attracted more cross-border M&As among IFRS-adopting countries, and that this increase in M&A activity within the IFRS countries is more pronounced for country pairs with low similarity in GAAP in the pre- IFRS adoption period. Overall, our results highlight the role of accounting standards and enforcement in shaping cross-border M&A activity. [ABSTRACT FROM AUTHOR]
